What's going on?
The UK’s going to need to break open the hard stuff for this one: data out on Friday showed British retail sales fell for a fourth month in a row in August.
What does this mean?
Things have been tough for the UK’s stores lately, which the country itself bears at least some of the blame for: there’s been a shortage of workers since Britain Brexited the European Union. But there are other, more global factors at fault too, from the rise of the Delta variant to the disruption of supply chains. 7% of British retailers even said they couldn’t get hold of the materials, goods, or services they needed in August.
Those handicaps saw the number of goods sold online and in store fall 0.9% between July and August. That added insult to injury after the 2.8% drop of the month before, and it was the first time the country’s retail sales have fallen four months in a row since 1996…
Why should I care?
For markets: Cue the course correction.
The Bank of England (BoE) had been mulling over a raise in interest rates next year, especially after Wednesday’s announcement that inflation was much higher than expected in August. But that’s suddenly looking less likely after Friday’s data stoked concerns that the UK’s recovery isn’t as robust as it looked. That’ll come as a relief for at least one group: UK investors might’ve been worried about the dent higher rates would leave in stock prices.
The bigger picture: … or not.
The BoE might be rethinking its plans, but the UK government isn’t: it’s continuing to roll back support for workers put in place last year. Add in the tax hike it announced earlier this week, and Brits are about to have less disposable income to throw around. And with price rises putting more pressure on what they do have, retail spending isn’t likely to improve anytime soon.